This is from an excerpt of a forthcoming interview with Consuelo Mack WealthTrack that airs Friday evening at 7:30 p.m. on public television — check your local listings.

Watch the excerpt above, or read on:

CONSUELO MACK:

So which stocks (Laughs) do we have to be in, Bill Miller, or do you have to be in? I’ve got to ask you about Apple, you know, disappointing earnings report recently. So what’s your take on Apple?

BILL MILLER:

Apple is the Dr. Jekyll and Mr. Hyde of the stock market. It’s the Dr. Jekyll in the sense that they are one of the greatest product innovators creating products that people love and a brand that people love, and they’re Mr. Hyde in their completely idiotic and dysfunctional capital allocation which is the worst probably in the history of corporate America among good companies. So they have $135 billion of cash. They have much more cash than Amazon (AMZN) has market cap. Tim Cook said when they had $90 billion of cash, he said it was way too much. They had not possible reason to use it, announced a modest dividend and a modest share buyback that would not even draw down the cash at all, not one dollar. A year later, 135 billion of cash. Cash is equity. Equity has a cost. The cost of equity, if you’re optimistic like me, it’s six percent. If you’re historical like others, it’s eight percent. So take six or seven or eight percent and multiply it times $130 billion, and that’s how much they’re destroying value every year with dumb capital allocation. They could double the dividend tomorrow and still have a big share buyback and never touch the cash. So Apple’s a case where when the company had a massive growth rate … and it’s still got a good growth rate … the stock went up because people didn’t care about the bad capital allocation, but now it’s in the Microsoft (MSFT) camp. Now it’s in the Cisco camp.

CONSUELO MACK:

So it’s there. It’s that kind of mature. It’s that …

BILL MILLER:

Now the market is saying, as the market has taken Microsoft’s multiple down every year, why do you have $85 billion of cash? You generate two billion a month. Why? Why aren’t you raising the dividend 25 percent a year instead of 15? Why aren’t you buying back stock? And so I think that’s the dilemma with Apple. I think Apple at $450 a share has huge optionality. It’s nine and a half times earnings. It’s going to grow probably 15 or 16 percent this year consensus, 12 to 14 next. Coke (KO) grows six to eight percent and trades at 17 times earnings, so if Apple had a capital allocation like IBM (IBM) or like McDonald’s (MCD) … McDonald’s pays out 100 percent of free cash flow to shareholders and trades at 15, 16 times. Apple would be up 50 percent on just sensible capital allocation. sensible capital allocation.

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There are 16 comments

FEBRUARY 6, 2013 4:04 P.M.

Joemiz wrote:

APPLE = OLD TECH - SAMSUNG = NEW TECH - APPLE WILL DIE IN THREE YEARS

FEBRUARY 6, 2013 4:16 P.M.

ChanHol wrote:

"From your lips to Tim Cook’s ears..." Well, unfortunately, that means AAPL won't do it. Idea's must be theirs to be good ideas. The moment it becomes obvious they are doing something wrong, they put everything they've got into defending themselves. For example: the iPhone 5 size.

FEBRUARY 6, 2013 4:21 P.M.

FreeRange wrote:

The stock is down because of idiots like Joemix listed here.

FEBRUARY 6, 2013 4:30 P.M.

Freerange wrote:

@ChanHol - so the single best selling smartphone in the world, from he company making over 70% of the profits in the entire global mobile phone market made the wrong size screen? Can only imagine what would happen if a genius like you were running the company...

EVERYONE should read the Wa Post story about the new plague carriers....androids.

FEBRUARY 6, 2013 5:34 P.M.

Ed wrote:

Tim Cook is a F Fool and belongs in the
Warehouse chasing parts. He is certainly
a poor excuse for a CEO.

FEBRUARY 6, 2013 5:45 P.M.

Bill wrote:

Cook needs the money so when he files
more lawsuits against Samsung and Google
and the Judge laughs at Apple, he can pay
the billions in legal fees!! Tim Cook our hero

FEBRUARY 6, 2013 6:07 P.M.

Cap wrote:

Miller's counsel seems like the best bet for Apple--build on present strengths. Don't feel the compulsion to have at least two innovative, golly gee whiz, eye-opening "wow" products per year. That's inviting hasty, trigger-finger decisions that will put the company's identification with "high quality" at risk. The same holds true if Apple follow's Amazon's lead (I've seen no mention yet of the latter's recent, stunningly quiet 10-15% discount to its best-selling tablets!). Perhaps Amazon can get away with such price-slashing tactics for the sake satisfying the analysts' exectation of ever-increasing revenues. But that's not Apple's game--to fall on their swords (even if only "flesh wounds") for the sake of moving more product into the market-place. To do so, is to immediately "devalue" the stock--and by implication the product--in the eyes of the consumer who, however value-conscious, is at the same time in possession of a "wish list" of ideal possessions, whether a Cadillac CTS or a new iMac with Fusion Drive.

FEBRUARY 6, 2013 6:48 P.M.

Tom wrote:

Apple needs to get rid of Cook asap and hire
Hastings or Schmidt for CEO and fast

FEBRUARY 6, 2013 7:03 P.M.

Bob wrote:

As long as Cook has his head up his ass,
this stock is going nowhere but down

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